We at Altum Advisory Group often cite the current perceived arbitrage opportunity for natural gas producers in the United States. The disconnect between domestic natural gas prices and natural gas prices abroad gives the appearance of a profitable arbitrage opportunity, holding all else equal. That arbitrage is slowly shrinking and will continue to be more fiction than fact unless more entities are granted the rights to exporting LNG.
“The DOE’s role in permit authorization is completely unnecessary and U.S. producers should be allowed to export [liquefied natural gas] to any country they see fit…Natural gas should be treated as any other good traded around the world…It should not be up to the Department of Energy or any federal agency to determine what amount of natural gas to export is in the public’s interest.”
“The U.S. can use its oil and gas resources to reverse both its relative economic and political troubles, putting itself back at the forefront of global trade, and taking a leadership role in climate change mitigation. Charles K. Ebinger and Kevin Massy drafted this memorandum to President Obama as part of Big Bets and Black Swans: A Presidential Briefing Book.”
A very interesting and thought provoking look at a potential long term effect of the coming global effects of an increased energy supply in North America coupled with an increased demand in Asia.
A number of recent news stories highlighting the increased use of natural gas in local governments, schools, and buisnesses is echoed in this article. More and more public and private industries are indicating that they are exploring potential benefits by using natural gas as a major energy source. Will the trend continue?
“Pennsylvania Centre County Commissioner Chris Exarchos thinks compressed natural gas-powered vehicles are the wave of the future, and the county is now taking step in that direction.”
“The decision follows that of several Centre Region municipalities and the Council of Governments, which have begun making CNG vehicle purchases to test the waters for future purchases.”
Nucor (NYSE: NUE) has recently taken advantage of an opportunity to hedge against the possibility of rising natural gas prices through investment in certain US Natural Gas wells. The steel maker’s investment reflects a growing trend of acceptance of hedging practices as well as a recognition of an increased reliance upon natural gas in manufacturing processes.
“A recent deal between North Carolina-based steel maker Nucor and Calgary-based natural gas producer Encana might serve as a model for other companies seeking to hedge their energy exposure through acquisitions of physical assets, say market observers.”
This blog is dedicated to the discussion of the exploration and production industry and the maximization of operations within that industry. The article we have attached addresses the intricacies of initiating an effective hedging program along with the challenges of achieving such a program. We at Altum Advisory Group understand the nature of an effective hedging program and acknowledge that there is no one blanket policy that can be used to cover all participants, as this article echoes.
“Risk managers and consultants say hedging corporate exposures to energy prices is more art than science. As a result, the development of a truly successful hedging programme requires several important questions to be carefully considered.”
“The liquefied natural gas (LNG) division of Calgary-based Ferus LP successfully completed in October what the company believes to be the first-ever hydraulic fracturing operation utilizing liquefied natural gas (LNG) as engine fuel in North America.”
At Altum Advisory Group, we understand and promote the need for accurate, meaningful hedging strategies to be a part of an exploration and production firm’s overall operations. The following article addresses an author’s opinion of future prices, and touches on one firm’s current hedging strategy.
“Much has been written about the Marcellus shales, the largest shale gas field in the US. The rapid drilling program has been responsible for a supply glut, which drove spot prices down this year as low as $2.00 per mmBtu. Since then, prices have recovered somewhat, to the $3.75 range. Until recently, it has been hard to get a good view of the supply side dynamics. This is largely because the shale phenomenon is so new that things have taken a while to sort out and for equilibriums to become established. We are now beginning to get a clearer picture.”